A sole proprietor benefits from changing over to a limited liability company, or LLC, in a number of ways. As the name suggests, an LLC member enjoys limited liability when it comes to debts and other obligations associated with the business, whereas a sole proprietor must deal with full liability for his business matters. When you upgrade from a sole proprietorship to an LLC, you must also take care of a few housekeeping issues, like updating your business bank account information.

Filing as an LLC

To file as an LLC, you must draw up and file articles of organization with the state your are doing business in along with basic information about the company's owner. To operate as an LLC, you need to appoint a registered agent, which is an entity or individual -- sometimes one of the members -- who is authorized to accept paperwork on the LLC’s behalf. You must also choose a fictitious business name that is not already associated with another business and pay the applicable filing fee. If you already have a filed fictitious business name, in some cases, you can transfer it for use with the LLC.

Do You Need a New Bank Account?

When you first open a business bank account as a sole proprietor you must provide basic business registration paperwork, any licenses associated with the company, the fictitious name, if applicable, and your business structure. When you change over to an LLC, you receive a new set of registration papers regarding your newly formed business entity. So in most cases, yes, you do have to start a brand new bank account because the LLC is considered a new and separate organization.

Fictitious Business Name and EIN

One reason why your bank requires a new account is that the fictitous business name for the new LLC company is different. A limited liability company’s name ends in “LLC.” The new business name is listed on the signature card at your bank, as well as on checks and the account debit card. Also, when you sign up for an LLC, you must apply for a new employer identification number, or EIN, for the company. The EIN is the identifying number for the company for tax purposes and differs from the sole proprietorship’s information.

Remember to Close the Other Account

When you bring your new LLC paperwork to your bank to open a new account, remember to close down the sole proprietor account as well. If you have outstanding checks or purchases, you must wait until they clear before closing the account. In meantime, stop using the old account completely. If you make automated clearinghouse, or ACH, bill payments from the account, change your banking information with your payees. Inform clients of your new business name so that they can issue payments to your new LLC business.

About the Author

Louise Balle has been writing Web articles since 2004, covering everything from business promotion to topics on beauty. Her work can be found on various websites. She has a small-business background and experience as a layout and graphics designer for Web and book projects.